‘Amazing opportunity’: Germany’s little-known grant for the self-employed

If you’re currently unemployed and thinking of starting your own business you may be eligible for Germany’s start-up and self-employment grant, called Gründungszuschuss.

This subsidy, offered by the Federal Employment Agency (Agentur für Arbeit) is designed to support startup founders and freelancers in the first months of working to establish their business.

While it isn’t exactly a secret, many foreigners in Germany don’t know about it and case workers at the employment agency don’t always think of recommending it.

The benefit, for those who manage to get the grant, is that they are then able to start earning income from their startup or from self-employment, while continuing to receive financial support for a number of months.

In my own experience, as I was launching my own self-employment, I learned about the programme from a friend just four weeks before the deadline and had to scramble to submit my application in time. I found the support super helpful, so I thought I should help spread the word.

If you’ve always dreamt of self-employment, it’s a great opportunity to start your journey. 

Who is eligible?

To get the Gründungszuschuss, you need to fulfil the following criteria:

• Be registered as unemployed
• Be eligible for, and have at least 150 days left of, unemployment insurance benefits (Arbeitslosengeld – ALG 1)
• Your business is your main activity, not a part-time job

People with disabilities (as defined by Section 19 of SGB III) may still be eligible when they have less unemployment entitlement left, or even when they are not unemployed.

Note that you can apply for the subsidy even after you’ve already started your business as well.

READ ALSO: 6 steps for starting your own business in Germany

Igor Ranc, creator of the Handpicked Berlin newsletter, did exactly that. “It’s an amazing opportunity, especially if you already have a small side business running,” he told The Local.

How does it work?

The programme takes place in two phases: Phase 1 lasts six months. During this time, you continue to receive your Arbeitslosengeld payments in full, so 60 percent of your previous salary, plus a stipend of €300 to pay for social security and health insurance.

Phase 2 lasts nine months. During this time, your standard Arbeitslosengeld payments stop, but you continue to receive €300 per month for social security and health insurance.

Having received Phase 1 of the grant does not automatically entitle you to receiving Phase 2. You’ll need to apply again, and the employment agency may deny your application if your business is doing well.

But this would be a good problem to have.

Why it helps

The main benefit of the grant is it allows you to continue to receive support while also beginning to build a business and even earn income.

Otherwise you can work while receiving unemployment benefits, but if your monthly earnings exceed €165, you’ll need to reimburse the Agentur für Arbeit. This puts some off of the idea of working or trying to launch a business during this time.

READ ALSO: How your eligibility for German citizenship can be affected by unemployment

A friend of mine, who didn’t know about the grant programme, started freelancing while unemployed and ended up having to pay back a large amount of money—not just his unemployment benefit, but also health insurance payments.

In contrast, with the Gründungszuchuss, you’re free to keep all the earnings from your new business in addition to the support you receive. This is why it’s such a great deal.

João, a 36-year-old founder from Portugal, was enthusiastic about the opportunity. “I find the level of support here impressive. We don’t have anything like this back home. [The grant] gave me the financial safety to build my German-learning app, which I probably wouldn’t have risked doing otherwise.”

 How to apply

The first step toward securing the grant is talking with your case worker at the employment agency (Vermittlungsfachkraft).

A woman walks past the sign for the Employment Agency in Dresden, Saxony. Photo: picture alliance/dpa | Sebastian Kahnert

You dont need an in-person appointment—just call the agency’s hotline, explain you are interested in Gründungszuschuss, and ask for your case worker to contact you.

They will then explain the process and ask for the official start date of your business. Remember, you must choose a date that leaves you with at least 150 days of unemployment benefits. As an example, my Arbeitslosengeld was set to end on January 8th, 2026, so I chose August 6th, 2025 as the start date.

Next, your case worker will set a deadline and unlock the section in your online portal to submit your application documents. It’s important to remember that your benefits stop on your official business start date, and there will be a lull until your first payment. Prepare accordingly!

You can typically expect a response from three to eight weeks after submitting your application, but it may take longer. In my case it took seven weeks, part of the delay may have been that I submitted it in August during the vacation season. If it’s been a month and you haven’t heard anything, I’d recommend calling the hotline to check-in.

What documents do you need?

● Business plan: This document explains your business in detail: what your company does, how it makes money and who your clients are. It usually includes a market and competitor analysis as well as a sales and marketing plan, and can be 15 to 25 pages long.

● Financial plan: A forecast of the next three years that shows your estimated costs, revenue, and profits. The pro-tip here is to be realistic. If you estimate high revenue in the first months, your application could be denied on the basis that you don’t need support.

● CV: An up-to-date version of your resume that highlights the experiences relevant to your business.

● Work references (Zeugnis): In Germany, when you leave your job, your employer must write a detailed reference letter summarizing your skills and accomplishments. 

● Proof of registration with the trade and/or tax office: If you start a business that sells products, you have to register it with the trade licensing office (Gewerbeamt). If you’re a freelancer, you’ll need a new tax number, which you can apply for at your local tax office or online via ELSTER, the digital tax office. The process can take up to five weeks, so send your request early.

READ ALSO: The essential information to include on an invoice in Germany

● Business viability certificate (Tragfähigkeitsbescheinigung): This is an expert review of your application that confirms the viability of your business venture. It’s no exaggeration to call it the most important document of your application, since case workers may base their decision primarily on this document. You can find experts at the IHK (Chambers of Industry and Commerce), trade associations, credit institutions or management consultancies. Contact them as early as possible to ensure they can review your application in time.

All documents must be submitted in German. If you speak very little German, you may want to consider hiring a professional translator. If you already have some knowledge of the language, translator apps and AI tools can be handy.

Additional support

If you have two months to spare, you may want to request an AVGS voucher for startup coaching. That way you’ll be assisted by an experienced coach who can help you craft your application for the best chance of being accepted. Many coaching institutes have English-speaking coaches.

Even without the voucher, you might consider investing in a few sessions out of pocket. Especially if you have no prior experience of creating a business plan, this can really be a worthwhile investment.

READ ALSO: How to get free career coaching when you’re unemployed with Germany’s AVGS voucher

“I think it’s important to get some help,” Igor Ranc said. “I would not have made it, if I didn’t use help for the financial part.”

A huge benefit

In my eyes, the subsidy was a godsend. I had been unemployed for a few months and knew I wanted to start freelancing, but hadn’t really taken the steps to get started.

Applying for the subsidy made it real: Suddenly I had to create a business plan, and put thought into my niche, my clients, my finances and more.

If you’ve wanted to work for yourself but never quite made it happen, the Gründungszuschuss is there to help support you in taking the leap.

In the words of Ken, French product designer and entrepreneur: “Being jobless is the best moment to start your own business. You have all the time and mental space to make it happen. But the financial pressure is usually pretty high…This is where the Gründungszuschuss can really help you take that first step.”